Update to PBGC e-4010 Instructions (PDF)On March 8, 2013, the e-4010 instructions were updated to reflect PBGC's guidance on the effect of MAP-21 on 4010 reporting. In addition, a few other minor modifications were made to the application. The linked item is a red-lined copy showing the changes, supplied to BenefitsLink by the PBGC.
(Pension Benefit Guaranty Corporation)

Instructions Released for Annual Funding Notice MAP-21 Disclosures (PDF)"Most plans opting to adopt the MAP-21 segment rates to determine minimum funding requirements for 2012 are required to provide information about the effect of MAP -- 21 rates on plan liabilities and minimum contribution requirements. The new disclosures should be position ed up front -- ahead of the usual annual information."
(Buck Consultants)

50 Shades of Pension Annuity Settlement Indices"Over the last few years, the U.S. pension marketplace has witnessed the development of several indices which help support the discussion surrounding pension settlement costs.... The objective of this post is to introduce readers to these indices and to discuss some of their similarities and differences." (Pi
(Pension Indemnification))

Stock-Drop Cases Reinforce Need for Fiduciary Due Diligence"A substantial body of case law has been developed regarding the standards that apply to judicial review of fiduciaries' decisions regarding company stock. A trio of cases from last year, however, underscore that courts may take different approaches in reviewing fiduciary actions."
(The Vanguard Group, Inc.)

This conference on ESOPs and equity compensation draws over 1,000 attendees from across the U.S. and includes 88 panels and many additional interactive sessions, keynote addresses and more.

Post-Crisis Reforms Making Pensions Sustainable?"A nationwide study ... projects that huge [public employee] pension fund losses during the financial crisis will be offset over three decades by a wave of recently enacted cost-cutting reforms -- but only if several things happen. [1] Pension fund earnings forecasts must hit their target.... [2] Government employers must make their actuarially required contribution to the pension fund each year.... [3] The cost-cutting reforms must not be rolled back."
(CalPensions)

Affluent Americans Naively Optimistic About Their Retirement Readiness"[W]hile most affluent Americans have a retirement plan in place (84%) and feel confident about their retirement readiness (80%), they may be underestimating how much money they will need once they retire. Survey respondents estimate they will need on average about $66,000 in annual income, significantly less than their current average income of $115,000."
(Financial Planning)

Mutual Fund 401(k) Trustees Still Favor Own Funds, Study Says"It might seem obvious that letting a mutual fund firm administer a 401(k) plan and also provide the investment options is as bad as letting a fox guard the henhouse.... It might also seem obvious that the industry trend for plans with open architecture -- giving participants equal access to virtually every investment option in the marketplace -- has solved this problem. Actually, nothing about that whole relationship is what it seems, according to a new academic paper."
(Institutional Investor)

Advisers Pitching 401(k) Plans: Do Your Homework"Research from Franklin Templeton Investments shows that plan sponsors turn to referrals from peers to find advisers with whom they would like to work, rather than responding positively to cold calls.... Advisers must do their homework and get to know their prospects so that they can showcase their abilities and how they can help."
(Investment News; free registration required)

Dollar-Cost Averaging's Powerful Role in 401(k) Investing"The longer you stick to a consistent investment plan, the greater the effects of dollar-cost averaging. This is why dollar-cost averaging is such a powerful piece of a long-term 401k investing strategy. By having your 401k contributions regularly allocated to the funds you have selected, you are reaping the benefits of dollar cost averaging without lifting a finger."
(Smart401k.com)

UK Pension Funds Struggle with Asset Allocation"Equity allocations for UK pension schemes fell from 61% in 2002 to 56% in 2007, and to 45% in 2012, according to data from Towers Watson. However, UK pension funds have increased their exposure to alternative assets from 3% to an average of 17% over the past decade and allocations to bonds have also increased over the past five years -- from 30% in 2007 to 37% in 2012."
(Financial Times)

[Opinion]

Pension Funds Struggle With Asset Allocation?"Investor paralysis is a dominant theme as the scars of 2008 are still fresh among retail and institutional investors reluctant to take on more risk in volatile equity markets. For large institutions asset allocation decisions are much harder as correlations among all assets increase dramatically in an environment of record low bond yields and unprecedented quantitative easing by central banks."
(Pension Pulse)

[Opinion]

In New Jersey: Lesson from a Phony Pension Reform"In June, 2011 New Jersey politicians enacted reforms that were supposed to 'save' the state retirement system.... Even without cost-of-living-adjustments benefit payouts increased by 7% (from $7.75 to $8.3 billion), a rate that would double payouts in 10 years, even without COLAs."
(Burypensions)

Benefits in General; Executive Compensation

Section 409A Tax Assessed on Discounted Stock Options -- Taxpayer Sues for Refund"[The IRS] has begun to enforce the Section 409A Rules in examination of employers sponsoring [non-compliant deferred compensation] arrangements. In a recent court case, ... the Plaintiff, Dr. Sutardja, appealed an IRS assessment of the 20% Section 409A surtax in the amount of $3,172,832 plus another $304,456 in interest ... The assessment resulted from the exercise of a stock option which was found by the IRS to have been issued at a discount below the fair market value on the date of grant. Under the Treasury Regulations, discounted stock options are subject to Code Section 409A and must have fixed dates for exercise and payment and may not contain any discretionary provisions for the time or form of payment."
(Leonard, Street and Deinard)

Annual Incentives Plans: Design Under the Microscope"Based on [a] review of company disclosures ... [1] Target [annual incentive plan (AIP)] levels have increased modestly over the past five years as companies have curtailed salary increases and reduced retirement benefits and perks in the quest for enhanced pay-for-performance alignment. [2] More companies are measuring AIP performance using multiple financial performance metrics.... [3] In order to provide more differentiated payouts among participants, companies have increased the use of individual performance evaluation and discretion in determining AIP payouts. [4] Payout levels overall seem generally aligned with performance, although some pay-for-performance outliers remain."
(Towers Watson)

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